EASTERN RESOURCES LIMITED — Interim / Quarterly Report 2014

Oct 29, 2013

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QUARTERLY REPORT - SEPT 2013
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HIGHLIGHTS

ASX Code: EFE

NOWA NOWA IRON PROJECT

ASX Code:Issued Capital: EFE117,870,484

Issued Capital: Directors

Share Price at Steve Gemell (Chairman) Greg De Ross (MD) Market Capitalisation at Ivo Polovineo

Cash on hand at Wendy Corbett Greg Jones Directors Adrian Critchlow Glenn Goodacre - Chairman

Greg De Ross - Managing Director

Ivo Polovineo - Non-Ex Director Address Wendy Corbett - Non-Ex Director Greg Jones - Non-Ex Director Level 1, 80 Chandos Street Steve Gemell - Non-Ex Director St Leonards, NSW 2065

Investor and Media Contact:

Fergus Ross Postal Six Degrees Investor Relations Fergus.ross@sdir.com.au PO Box 956, Crows Nest NSW 1585 Address

Level 1, 80 Chandos Street

St Leonards, NSW 2065 T: +61 2 9906 7751 F: +61 2 9906 5233 Postal

PO Box 956, Crows Nest

NSW 1585 Twitter: @EasternIronEFE

T: +61 2 9906 7751 F: +61 2 9906 5233 www.easterniron.com.au www.easterniron.com.au

Twitter: @EasternIronEFE

• Mining Licence application for the Nowa Nowa Iron project submitted to Victorian Department of State Development, Business and Innovation

• Finalisation of documentation for project referral

• Significant progress on all aspects of the Feasibility Study.

OUTLOOK

• Victorian Government to provide up to $300,000 for studies relating directly to infrastructure requirements for Nowa Nowa project

• Public consultation process relating to Mining Licence to commence

• Feasibility study remains on track for completion in December, 2013.

Eastern Iron Limited (ASX: EFE) is pleased to report on activities undertaken during the quarter ended 30 September 2013.

NOWA NOWA IRON PROJECT

The Nowa Nowa iron deposit is located some 250 kilometres east of Melbourne close to the Princes Highway, which provides access to several nearby towns and a proposed export facility south of Eden, approximately 200 kilometres further east (Figure 1 on next page).

Eastern Iron is undertaking a Definitive Feasibility Study (DFS) into the potential development of the magnetite-rich iron ore at the Five Mile deposit. It is proposed that iron ore would be mined at Five Mile, crushed and beneficiated to export quality at site, and trucked to a port facility at Two Fold Bay south of Eden in southern NSW.

In parallel with the progress of the feasibility study Eastern Iron is also undertaking environmental studies and the preparation and submission of documentation to support permitting and approval of the project, should the Company make a decision to proceed to development based on the results of the feasibility study.

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Figure 1: Nowa Nowa Locality Plan

Mining Licence (MIN) Application

Late in the quarter the Company announced that a significant milestone in its goal to develop a mining operation had been achieved with the application for a Mining Licence (MIN 5571) for the Nowa Nowa Five Mile project. The Company is targeting the grant of the MIN in the first quarter 2014

Native Title Agreement

The project area at Nowa Nowa is entirely within a granted Native Title claim area held by the traditional owners, the Gunaikurnai people. The Company is in advanced discussions with GLaWAC (Gunaikurnai Land and Waters Aboriginal Corporation) with the aim of entering into a native title agreement to cover development and mining at Five Mile.

Victorian Government Infrastructure Grant

Subsequent to the quarter Eastern Iron announced that it had entered into an agreement with the Victorian Government, through Regional Development Victoria (RDV), whereby RDV would contribute up to $300,000 towards costs incurred for those segments of the Nowa Nowa project feasibility study that related directly to project infrastructure requirements.

Payment of the grant is conditional on completion of the feasibility study and it is expected that the funds will be provided in February 2014.

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Figure 2: MIN boundary and major components of proposed mine development at the Five Mile project

Feasibility Study

During the quarter, Eastern Iron continued to progress key elements of the Definitive Feasibility Study which is due for completion in the next quarter.

Project delivery specialist Engenium is project managing the study with inputs from specialist subconsultants in the areas of:

• Mining – mine design, scheduling, waste rock and tailings storage (McCracken Mining Services/Mining One Pty Ltd)

• Resource estimation – H&S Consultants Pty Ltd

• Geotechnical investigations – Mining One Consultants Pty Ltd

• Hydrology/hydrogeology – AECOM Ltd, Earth Systems Pty Ltd

• Port and Transport studies – Engenium, Innovative Shipping Pty Ltd

• Marketing – Fundmax Pty Ltd

• Process testwork and design – Resource Engineering Pty Ltd, Engenium

• Environmental Studies – Earth Systems Pty Ltd

• Tailings management and storage – Earth Systems Pty Ltd, Mining One Pty Ltd

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Metallurgy

The scoping study assumed that the ore would be beneficiated by crushing and wet low intensity magnetic separation (Wet LIMS) prior to shipment. However, the requirement to construct a large tailings dam for capture and storage of the non-magnetic process tailings and implications for the capital cost of the project development has prompted a change to using Dry LIMS as the primary beneficiation technique. Whilst Dry LIMS is less efficient in beneficiating the ore and reducing levels of the major contaminants, the advantages in cost and simplicity of the overall development favour this option.

Dry LIMS testwork conducted representative composite drill core samples (after crushing to -10mm) recorded an average concentrate analysis from beneficiated product of 59.5% Fe, 9.8% SiO2, 1% Al2O3, 0.01% P and 1.1% S. Mass yields, i.e. mass of product produced after crushing and magnetic separation of ROM ore, were typically greater than 80%. The testwork will be extended over the next quarter to lower grade material from elsewhere within the Resource.

Water Supply

Total project water supply requirements are predicted to be low with the adoption of the Dry LIMS beneficiation technique as this method does not require significant process water. Groundwater collected from the open pit and runoff from around the operating areas during rainfall events will be collected in a dam adjacent to the open pit. This water will be used for dust suppression around the site. The mine and associated operations are designed so that no water will be discharged from the mining area during the operating life.

Engineering

Design criteria have now been established for all components of the project with detailed design and cost estimation for the project including earthworks, infrastructure and service supply, roads, modifications to the SEFE port facility and crushing and processing plant now underway.

Mining

During the next quarter mining consultants, Mining One Pty Ltd, will undertake mine optimisation, mine planning and production scheduling based on the updated resource model and inputs from recently completed metallurgical studies.

Port

Iron ore product will be delivered via bottom-dumping bulk haulage trucks to a proposed stockpile area within the SEFE port facility area near Eden on the southern side of Twofold Bay, NSW. The iron ore will be stockpiled using a portable ore stacker and reclaimed during ship loading onto a new conveyor which will feed the existing SEFE wharf conveyor and ship loader. The stockpile capacity will be around 70,000t which is sufficient for loading vessels of 50-60,000t capacity expected to be used. Civil, mechanical and electrical design for the port development is underway and will be completed during the next quarter.

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Marketing

Eastern Iron has been approached by several groups interested in securing iron ore product from Nowa Nowa under long term off-take arrangements. The terms of such agreements have been generally discussed and it is apparent that there is significant interest in securing the product either as a direct smelter feed or for further processing to a high grade concentrate. The Company intends to progress these discussions to put in place firm off-take arrangements following completion of the DFS in the first half of 2014.

FORWARD PROGRAM

• Finalise the Nowa Nowa DFS

• Complete a port access agreement with port operators (SEFE) to the south of Eden

• Lodge the referral documents and receive a decision from the Victorian Government on permitting requirements

• Finalise the Native Title Agreement

• Increase Stakeholder engagement

• Progress product off-take discussions.

FINANCIAL POSITION

Total exploration expenditure for the quarter was $794,000. The cash balance at the end of the quarter was $630,000. The company is in an advanced stage of negotiations to secure further funding to ensure completion of the Nowa Nowa Feasibility Study as scheduled. Eastern Iron anticipates cash receipts from the sale of the NSW Iron Pisolite Project of $280,000 (including $130,000 from release of security deposits) and the announced contribution from the Victorian Government of up to $300,000 towards qualifying infrastructure expenditure on the Nowa Nowa feasibility project. In addition, the company has lodged its 2013 income tax return which includes a claim of $670,000 under the R&D provisions of the Income Tax Legislation.

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Mr Greg De Ross, Managing Director Mob: 0417 711 274

The information in this report that relates to Exploration Results, Mineral Resources and Ore Reserves is based on information compiled by Greg De Ross, BSc, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Greg De Ross is Managing Director and a full-time employee of Eastern Iron Limited and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr De Ross consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

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INVESTOR INFORMATION

Eastern Iron is investigating the potential for development of a high grade magnetite resource at Nowa Nowa in Eastern Victoria as well as a magnetite processing operation based on magnetite deposits it holds under permit in Central Queensland. The Company is also in joint venture with 3E Steel to investigate the potential for developing large low cost low grade iron deposits in central western NSW.

Further information, previous Eastern Iron announcements and exploration updates are available at the News and Reports tab on the Company’s website – www.easterniron.com.au

ASX: EFE

For enquiries on your shareholding or change of address please contact: Boardroom Limited GPO Box 3993, Sydney NSW 2001 Phone: (02) 9290 9600

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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

EASTERN IRON LIMITED

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ABN 70 126 678 037 Consolidated statement of cash flows

Quarter ended (“current quarter”) 30 September 2013

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid/received on R&D tax offset 1.7 Other - consulting fees and rental income - tenement security deposits (paid)/refunded Net Operating Cash Flows	Current quarter 30 September 2013 $A’000	Year to date (3 months) 30 September 2013 $A’000
	0 (902) 0 0 (159) 0 18 0 0 10 (10)	0 (902) 0 0 (159) 0 18 0 0 10 (10)
	(1,043)	(1,043)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other Net investing cash flows 1.13 Totaloperating andinvesting cash flows (carriedforward)	0 0 0 0 0 0 0 0 0	0 0 0 0 0 0 0 0 0
	0	0
	(1,043)	(1,043)

Appendix 5B Page 1

30/9/2001

Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

	Current quarter $A’000	Year to date $A’000
1.13 Total operating and investing cash flows (brought forward)	(1,043)	(1,043)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other – Equity raising costs Net financing cash flows	0 0 0 0 0 0	0 0 0 0 0 0
	0	0
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(1,043) 1,673 0	(1,043) 1,673 0
	630	630

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 Aggregate amount of payments to the parties included in item 1.2 1.24 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
	137
	Nil

• 1.25 Explanation necessary for an understanding of the transactions

Salaries, directors’ fees and consultancy fees at normal commercial rates

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

None

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

• Expenditure by joint venture partners on exploration tenements in which Eastern Iron has an interest amounted to $107,000.

Appendix 5B Page 2

30/9/2001

Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

Financing facilities available

Add notes as necessary for an understanding of the position.

	3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
		Nil	Nil
		Nil	Nil

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A'000
	460
	0
	0
	252
Total	712

Funding

Refer Financial Position section of Quarterly Activities Report for details of future funding arrangements.

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows	Current quarter $A'000	Previous quarter $A'000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other - bills receivable, bank accepted and short term bank deposits	100	239
	24	23
	0	0
	506	1,411
Total: cash at end of quarter(item 1.22)	630	1,673

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter
	MIN 5571	Mining Licence application	0%	100%

Appendix 5B Page 3

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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

6.3 The full Eastern Iron schedule of tenements is included as an attachment to this report.

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total Number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference securities 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions	Nil
	Nil
7.3 Ordinary securities - fully paid EFE 7.4 Changes during quarter (a) Increases through issues (b) Decreases through return of capital, buy-backs	117,870,484	117,870,484
	1,978,009	1,978,009	$0.06	$0.06
7.5 Convertible debt securities 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	Nil
	Nil
7.7 Options EFE 10 cents EFE 18 cents EFE 20 cents EFE 18 cents 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	3,700,000 1,200,000 1,850,000 1,650,000	0 0 0 0	Exercise price $0.10 $0.18 $0.20 $0.18	Expiry date 23 Nov 2015 9 Mar 2015 23 Nov 2013 23 Nov 2013
	Nil
	Nil
	Nil
7.11 Debentures (totals only)	Nil
7.12 Unsecured notes (totals only)	Nil

Appendix 5B Page 4

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Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED

Compliance statement

1. This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Law or other standards acceptable to ASX (see note 4).

2. This statement does give a true and fair view of the matters disclosed.

Sign here: Date: 30 October 2013 ( ~~Director~~ / Company Secretary)

Print name: Ian K White

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenements, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3. Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

5. Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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Appendix 5B Page 5

30/9/2001

Appendix 5B Mining exploration entity quarterly report

EASTERN IRON LIMITED Schedule of Tenements as at 30 September 2013

Tenement	Tenement Number	Interest	Joint Venture Details
NEW SOUTH WALES
Cobar Project Area Cobar East Coolabah West and Oakvale Quartermaine Techno and Tottington Wendoline Shaun Wallace Gromit Gorgonzola Camembert Main Line Project Area Bimbella Euabalong McGraw Flamingo Preston	EL 6710 ELs 6711 and 6706 EL 6953 ELs 6954 and 6956 EL 6957 EL 6958 EL 6959 EL 6960 EL 7282 EL 7283 EL 6671 EL 6672 EL 6961 EL 6952 EL 6962	100% 49% 100% 49% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	3E Steel can earn 77.5% PlatSearch 51% 3E Steel can earn 77.5% PlatSearch 51% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5% 3E Steel can earn 77.5%
QUEENSLAND
Hawkwood Auburn Fairhill and Rolleston Eulogie	EPMs 15289 and 17099 EPM 18566 EPCs 2175 and 2206 MDL 362	0% 100% 100% 100%	Rugby 100%, Eastern can earn up to 80%, Note 1 - - Note 2
VICTORIA
Nowa Nowa Nowa Nowa East Nowa Nowa MIN	EL 4509 ELA 5405 MIN 5571	100% 100% 100%	- - Note 3
EL = Exploration Licence ELA = Exploration Licence Application EPM = Exploration Permit for Minerals EPC = Exploration Permit for Coal

Notes:

1. Joint Venture with Rugby Mining Pty Ltd and Rugby Mining Limited whereby Eastern can earn up to an 80% interest.

2. MDL 362 is held by Queensland Iron Pty Ltd a wholly owned subsidiary of Eastern Iron.

3. MIN 5571 is held by Gippsland Iron Pty Ltd a wholly owned subsidiary of Eastern Iron.

Appendix 5B Page 6

30/9/2001